What Is a Promotion?

In terms of a career, a promotion refers to the advancement of an employee's rank or position in a hierarchical structure. In marketing, promotion refers to a different sort of advancement. A sales promotion entails the features—via advertising and/or a discounted price—of a particular product or service. Product promotions can also be classified as "sales" or "specials."

[Important: A promotion is a term that is used in different contexts, the most popular being a job promotion.]

Understanding the Different Types of Promotions

Job Promotions

A job promotion is usually handed to an employee who has displayed exceptional performance or has developed the appropriate skills and knowledge necessary to take on the higher job responsibility. In the latter case, the employee may have been with the company for a required amount of time to be eligible for the promotion.

For example, an individual who starts off as an analyst in an investment bank may have to do time for three years in this role, before he gets considered for the next step up, which is the associate position. A promotion is usually accompanied by a higher salary and increased job responsibilities. It might also include an expansion of benefits and managerial authority over other employees.

Product Promotions and Sales

Another area where promotion is applied frequently is in the marketing sector. In marketing, a brand, company, product or service is usually promoted in an attempt to increase or improve the perception of the promoted asset.

Product promotions are designed to increase sales of a product or service. Promotional tactics run the gamut—from coupons to "two-for" sales (buy one, get a second one free) to straight dollar markdowns or percentage discounts.

Sales promotions are usually carried out through online media such as social media platforms, digital communication such as mobile SMS, print media such as newspapers, or in a physical location such as a retail store. Other ways used to promote a business or product include word of mouth, business cards, and flyers.

Stock Promotions

The capital market is not left without its own promotions. Stock promotions are carried out when an individual or a group wants to hype a stock. Unfortunately, stock promotions in the capital market are mostly a fraudulent scheme carried out by people who already own shares in their portfolio. These shares usually are priced really low and are from little known companies with no solid financial fundamentals.

If the promoter’s tactics work, and more people buy the stock, the value would go up. When this happens, the stock promoter would sell or dump all his shares in the market in classic pump-and-dump style. Stock promoters use a variety of vehicles to promote the stock including advertising online, cold calling, and digital email spams.

In investments, promotion refers to creating awareness to little known stocks in the hopes of increasing demand, and thus, the price of the stock.

Key Takeaways

  • A promotion can refer to the advancement of an employee's position, creating awareness around certain product deals, or creating buzz around little known stocks.
  • Promotions are applied frequently in the marketing sector.
  • The term is used differently in different contexts, the most popular being a job promotion.
  • In investments, a "promotion" refers to creating awareness to little known stocks in the hopes of increasing demand and the price of the stock.